Does access to credit improve productivity? Evidence from Bulgarian firms

Inessa Love and Roberta Gatti

No 6676, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Although it is widely accepted that financial development is associated with higher growth, the evidence on the channels through which credit affects growth at the microeconomic level is scant. Using data from a cross section of Bulgarian firms, we estimate the impact of access to credit, as proxied by indicators of whether firms have access to a credit line or overdraft facility on productivity. To overcome potential omitted variable bias of OLS estimates, we use information on firms? past growth to instrument for access to credit. We find credit to be positively and strongly associated with TFP. These results are robust to a wide range of robustness checks.

Keywords: Access to credit; Productivity; Transition (search for similar items in EconPapers)
JEL-codes: D24 G21 G32 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-cfn, nep-eff, nep-fdg and nep-tra
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Citations: View citations in EconPapers (78)

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Working Paper: Does access to credit improve productivity ? Evidence from Bulgarian firms (2006)
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